Wall Street Analyst Says $25 Billion is Owed in Crypto Taxes

‘Massive’ selling of cryptocurrencies into fiat by mid-April to be expected, as U.S. crypto holders ‘likely’ owe $25 billion in capital gain taxes according to Tom Lee, head of Fundstrat Global Advisors.

Tom Lee, the former chief equity strategist at J.P. Morgan Chase is amongst the few, if not the only Wall Street analysts who are providing regular thoughts and analysis on Bitcoin and the overall state of the crypto market.

PRESSURE RISES AS DEADLINES APPROACH

As the mid-April tax filing deadlines approach, Lee says that cryptocurrency selling pressure rises. In a report for CNBC, the analyst says that he estimates an approximate $25 billion being owned in capital gain taxes for cryptocurrency holdings by U.S. Households. And that’s the ‘low estimate’.

As the tax day approaches, we could witness ‘massive’ selling of cryptocurrencies into U.S. dollars.

Lee explained:

This is a massive outflow from crypto to USD and historical estimates are each $1 of USD outflow is $20-$25 impact on crypto market value.

Going further, the expert believes that selling pressure is also being piled up by crypto exchanges.

Many exchanges have net income in 2017 [of more than] $1 billion and keep working capital in Bitcoin or Ethereum and not in USD — hence, to meet these tax liabilities, are selling BTC/ETH.

TAXES ARE NO JOKE

In late March, the IRS reminded that virtual or digital currencies are taxable by law just as transactions of any other type of property. The taxman also went on reminding that steep penalties are in for those who fail to properly oblige by mid-April’s tax day.

While administrative cash penalties and interest are awaiting low-key crypto investors for failing to report their taxes, those who deal in larger quantities definitely have a lot more on the line to worry about, according to the release from the IRS:

Criminal charges could include tax evasion and filing a false tax return. Anyone convicted of tax evasion is subject to a prison term of up to five years and a fine of up to $250,000. Anyone convicted of filing a false return is subject to a prison term of up to three years and a fine of up to $250,000.

Yet, a recent poll in twitter held between more than 7,500 people revealed that 53% of them aren’t really worried about taxes on the premise that “They’ll never catch me”.

WHAT DOES THIS MEAN FOR THE CRYPTO MARKET?

Tax-related selling would certainly add to the tough start of the year for Bitcoin. Yet, Tom Lee and other proponents remain positive.

When asked about Lee’s previous prediction of Bitcoin’s price, the analyst maintains his full-fledged positivity:

“We’re still positive. The important trends to focus on crypto are that there’s a lot of underlying progress, adoption is still growing,” adding that “Ultimately, we expect bitcoin to find footing after April [17], tax day.”